Javier Milei’s next mission: slash tariffs and make air-fryers affordable again

[AndreasHG]

On November 19th, Argentina elected a new president, the libertarian populist Javier Milei of La Libertad Avanza (Freedom Advances). He inherited a difficult legacy from the previous Peronist government with hyperinflation of 211% in 2023, a recession of 1.6% and a high poverty rate of 45%. 

After one year in power, it's time to draw a first assessment of the results obtained by this atypical politician, made famous for the electoral campaign fought with chainsaw blows.

These are Milei's most relevant achievements:

 

1. Decline in inflation: on a monthly basis (as at October), inflation now stands at around 2.7%, or 37.7% per year.
2. Budget surpluses: As soon as he took office, Milei began to reduce state spending by abolishing or merging ministries and subordinate authorities. Since January, the new government has been able to achieve a budget surplus every month (for the first time since 2008), although a slight deficit was recorded again in July, which the government explained with seasonally higher expenditure.
3. Foreign investments friendly legislation: Argentina is not only rich in agricultural products, but also has attractive conditions for investments in the energy and raw materials sector. The country has considerable gas and hydrogen reserves and favorable climatic conditions for renewable energies as well as valuable raw materials, particularly lithium. Milei launched the investment promotion package RIGI, which includes 30-year tax concessions and foreign trade facilitation for larger investments (over USD 200 million) in selected sectors. Since the law came into force in July, the first foreign companies have already announced investments.
4. Relaxation of tenancy law: Milei introduced a comprehensive liberalization of tenancy law. Under the previous Peronist government, rental agreements were subject to numerous restrictions. In view of these restrictions, many landlords refrained from putting their apartments on the market, and the demand for apartments far exceeded the available supply. 
   Milei's government scrapped previous regulation and liberalized the tenancy law: terms and currency can now be freely negotiated between the tenants, often now on a quarterly basis and in US dollar. The relevant real estate portals immediately recorded more than double the number of apartments on offer.
    

But Milei's reforms do not stop here. In an article published today by the Financial Times, the author (Ciara Nugent, link below) describes how "Javier Milei has begun wrenching open Argentina’s protectionist economy, slashing tariffs in a bid to beat down high prices on everything from air fryers to electronics."

"A Black & Decker air fryer that sells for $100 in the US retails for $289 in Argentina, according to listings on online retailers. A Zara slip dress that costs $25 in the US sells for $67 in the country, while an Apple iPhone 15 on sale for $799 in the US costs $2,800."

 

Milei's government not only "has slashed tariffs on dozens of products", but has got rid of most of the red tape that was an obstacle to the import of goods, such as "a rule that required representatives of local manufacturers to give approval for some imports from their foreign rivals."

Milei is now switching his focus on Mercosur, which he called a "prison" because it imposes common tariffs for all imported goods into the area of up to 20%.

 

Given the surprisingly positive results obtained by the Milei government in the first year of its mandate, which aroused the admiration of Donald Trump and Elon Musk among the others, we can only look with optimism at the new battle for cuts or for the abolition of import duties, to which Milei has committed starting from 2025. 

 

https://www.ft.com/content/e3a9b2ee-c5f4-480a-9ae4-70d94492d57b

 

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And he's reversed himself on the question of trade with China. Now he's gung-ho in favor of it.